Buying A Beaten Growth Stock For The Growth Portfolio Beating The Market

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Includes: BHC, RAD, REGN
by: Abba's Aces
Summary

This week I bought Regeneron because of the 10% beating it took on the back of the news last week for its cholesterol medication.

I also added Rite-Aid into the mix while closing my position in Valeant Pharmaceuticals.

The portfolio is up 6.69% for 2015 compared to the 1.85% gain in the S&P 500.

Back in December 2014 I decided that I wanted a portfolio strictly for high flying high growth stocks and added Celgene (NASDAQ:CELG) as the first stock in the portfolio. Since that time the portfolio has grown as high as 28 positions and is up 6.69% for 2015 compared to the 1.85% gain in the S&P 500. The intention of this portfolio is to be liquid, or for short-term investments.

Almost on a weekly basis I've been making moves in this portfolio, either by adding a stock or removing. After breaking out my screens into the different sectors I adjust my search criteria within each sector. First and foremost I look for companies which are midcaps or larger (over $2 billion), have been profitable over the past year, and depending on the sector usually double digit earnings growth rates for the short- and near-term earnings expectations (except for utility stocks). This past week I sold Valeant Pharmaceuticals (VRX) while buying Regeneron (NASDAQ:REGN) and Rite-Aid (NYSE:RAD). I'd like to give a quick synopsis of each right now and provide an update for the entire portfolio.

Valeant Pharmaceuticals

The stock appears to be inexpensively on next year's earnings estimates and expensive on earnings growth potential while it has great near- and long-term earnings growth expectations. The company doesn't pay a dividend and has decent financial efficiency ratios. The reason I got out of the stock was because I had a great gain and just locked in profits because it was on a steady decline since the beginning of June. Don't get me wrong, this is a great company still but I just think I can pick it up again if it drops even more.

Regeneron

The stock appears to be expensively valued on next year's earnings estimates and on earnings growth potential, and has great near- and long-term earnings growth expectations. The company doesn't pay a dividend and the financial efficiency ratios are pretty decent. The company's cholesterol medication, Praluent, was given the go-ahead last week by the advisory committee at the FDA. The problem investors had with the decision was that it was for a much narrower group than anticipated and the stock sold off on the back of the news. The reason I got in the stock was because I felt that with the actual selloff that I could get the stock at a reasonable price as it has now dropped 10% from its highs.

Rite-Aid

The stock appears to be fairly valued on next year's earnings estimates and inexpensive on earnings growth potential, and has great near- and long-term earnings growth expectations. The company doesn't pay a dividend and the financial efficiency ratios are pretty decent with the exception of the return on equity. Credit Suisse recently initiated coverage on the stock at an "outperform" rating with a price target of $10, which is about a 14% gain from today's price of $8.75. The reason I got in the stock was because I felt that the turnaround story has been booming for the past couple of years and think it can still continue as the stores continue to be revamped and bring in more clientele.

Now it's time for an update on the entire portfolio.

Company

Ticker

% Change
incl. DIV

% of
Portfolio

Skechers USA Inc

(NYSE:SKX)

66.05%

4.93%

Netflix Inc

(NASDAQ:NFLX)

51.57%

4.50%

Harman Intl Inds Inc

(NYSE:HAR)

20.25%

3.57%

Align Technology Inc

(NASDAQ:ALGN)

13.10%

5.81%

Illumina Inc

(NASDAQ:ILMN)

11.17%

3.30%

Lululemon Athletica Inc Com

(NASDAQ:LULU)

3.68%

3.42%

Facebook Inc CL A

(NASDAQ:FB)

3.58%

3.07%

United Therapeutics Corp Del

(NASDAQ:UTHR)

2.40%

3.16%

Whitewave Foods Co

(NYSE:WWAV)

1.52%

3.19%

Rite Aid Corp

 

0.96%

3.00%

Polaris Industries Inc

(NYSE:PII)

0.61%

5.26%

Carnival Corp

(NYSE:CCL)

0.30%

3.66%

T-Mobile US Inc

(NASDAQ:TMUS)

0.11%

3.66%

Regeneron Pharmaceuticals

 

-0.02%

2.97%

Level 3 Communications Inc

(NASDAQ:LVLT)

-0.80%

2.94%

Restoration Hardware Hldgs Inc

(NYSE:RH)

-0.97%

2.94%

Under Armour Inc

(NYSE:UA)

-1.22%

3.25%

Viasat Inc

(NASDAQ:VSAT)

-1.69%

2.92%

Fiat Chrysler Automobiles N V

(NYSE:FCAU)

-1.75%

2.92%

Bristol Myers Squibb Co Com

(NYSE:BMY)

-2.65%

3.29%

American Tower Corp REIT

(NYSE:AMT)

-2.66%

5.06%

Enbridge Energy Partners LP

(NYSE:EEP)

-4.07%

3.32%

Markwest Energy Partners LP

(NYSE:MWE)

-7.04%

3.12%

Royal Caribbean Cruises LTD

(NYSE:RCL)

-7.19%

2.75%

Ford Motor Company

(NYSE:F)

-8.19%

2.72%

Dominion Resources Inc

(NYSE:D)

-10.56%

4.21%

Shake Shack Inc Cl A

(NYSE:SHAK)

-14.15%

2.60%

ICICI Bank Ltd-SPON ADR

(NYSE:IBN)

-23.74%

2.26%

Cash

$

 

3.84%

These are definitely high flying stocks with the exception of Dominion , Mark West Energy , American Tower , and Enbridge Energy Partners . All these puppies are definitely geared for growth in my opinion. So far this portfolio is beating the overall market but the key is to keep tabs on all your stocks regularly as well.

Disclaimer: This article is in no way a recommendation to buy or sell any stock mentioned. This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!

Disclosure: The author is long RAD, ALGN, AMT, BMY, CCL, D, EEP, F, FB, FCAU, HAR, IBN, ILMN, LULU, LVLT, MWE, NFLX, PII, RCL, REGN, RH, SHAK, SKX, TMUS, UA, UTHR, VSAT, WWAV. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.